**Summary:**
This policy analysis, dated July 7, 2025, examines the impact of measures implemented on October 1, 2024, to strengthen the equity index derivatives framework. The study compares trading activity in the Equity Derivatives Segment (EDS) versus the cash market between December 2024 and May 2025, focusing on both all investors and individual investors.
Key findings indicate a mixed trend: index options turnover decreased by 9% in premium terms and 29% in notional terms year-on-year. However, compared to two years prior, index options volume increased by 14% in premium terms and 42% in notional terms. Individual investor turnover in EDS decreased by 11% year-on-year but increased by 36% compared to two years ago. The number of unique individual investors trading in EDS decreased by 20% compared to the previous year but increased by 24% from two years ago. The analysis also notes that India continues to exhibit a relatively high level of trading in EDS, especially in index options, compared to other markets.
Further analysis of individual traders' profit and loss in EDS for FY2025 reveals that approximately 91% incurred a net loss, mirroring the trend observed in FY2024. A more comprehensive study covering the financial year-wise trend for the six-year period (FY2020-FY2025) and the analysis of individual traders' profit and loss in EDS is available on the SEBI website (www.sebi.gov.in).
To ensure investor protection and market stability, trends in index options turnover will continue to be monitored. Furthermore, to align the rapid growth in the derivatives market with commensurate risk monitoring, SEBI introduced additional measures on May 29, 2025, aimed at: enhancing risk monitoring and disclosure in derivatives, reducing instances of spurious ban periods for derivatives on single stocks, and improving oversight over potential concentration or manipulation risk in index options.
Key Entities Referenced
Equity Derivatives Segment: A segment of the financial market focused on trading equity derivatives, often abbreviated as EDS.
SEBI: The Securities and Exchange Board of India, the regulatory body conducting the study and issuing circulars.
October 01, 2024: Date of a SEBI circular introducing measures to strengthen the equity index derivatives framework.
December 2024 to May 2025: The period analyzed in the study regarding trading activity in the Equity Derivatives Segment (EDS) and cash market.
Financial Year 2020-2025: The six-year period (FY2020 to FY2025) for which the Financial Year wise trend is analyzed.
May 29, 2025: Date of a SEBI circular introducing measures for better monitoring and disclosure of risks in derivatives.
Index options: A type of derivative contract based on a stock market index.
Mumbai, Maharashtra: City in Maharashtra where the press release was issued.
PR No.39/2025
Comparative study of growth in trading in Equity Derivatives Segment (EDS)
vis-à-vis Cash Market after recent measures
1. After the introduction of recent measures to strengthen the equity index
derivatives framework vide circular dated October 01, 2024, there have been
certain media reports highlighting the impact of the measures. In order to
present the factual impact of these measures, the trading activity of both (i) all
investors and (ii) individual investors, for the period December 2024 to May
2025, has been analyzed.
2. While the full study carried out by SEBI on the trading activity in EDS vis-à-vis
cash market is available on the SEBI website at www.sebi.gov.in, the key
findings for the period December 2024 to May 2025 (after the first set of
measures started to take effect) are as under, across both the stock exchanges:
a. Index options turnover, year on year, is down by 9% (in premium terms)
and 29% (in notional terms). However, compared to 2 years ago, index
options volume is up by 14% (in premium terms) and 42% (in notional
terms).
b. Turnover of individuals in premium terms in EDS is down by 11% year
on year and up by 36% over similar period two years ago.
Page 1 of 2c. Number of unique individual investors trading in EDS down by 20%
compared to previous year and up by 24% from 2 years ago.
d. India continues to see relatively very high level of trading in EDS,
compared to other markets, particularly in index options.
3. The Financial Year wise trend for six-year period (i.e. FY 2020 – FY 2025) along
with analysis of profit and loss of individual traders in EDS is covered in the full
study carried out by SEBI.
4. Analysis of profit and loss of individual traders in EDS suggests that at
aggregate level, nearly 91% of individual traders incurred net loss in EDS in FY
2025 (similar trend was observed in FY 2024).
5. Trends in turnover of index options will continue to be observed from the
perspective of ensuring investor protection and market stability.
6. In order to ensure that the rapid growth in derivatives market matches with
commensurate risk monitoring metrics, SEBI vide circular dated May 29, 2025,
introduced certain measures with following key objectives :
a. Better monitoring and disclosure of risks in derivatives
b. Reducing instances of spurious ban periods for derivatives on single
stocks
Better oversight over the possibility of concentration or manipulation risk in index options
Mumbai
July 07, 2025
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